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On Monday, JPMorgan adjusted its price target on Apollo Global Management (NYSE:APO) shares, reducing it to $151 from the previous $161, while continuing to recommend the stock with an Overweight rating. With a current market capitalization of $76.75 billion and trading at $134.49, InvestingPro analysis suggests the stock is slightly undervalued, aligning with JPMorgan’s bullish stance. As a prominent player in the Financial Services industry, Apollo has maintained dividend payments for 15 consecutive years, demonstrating consistent shareholder returns. The revision follows Apollo’s first-quarter earnings, which fell short of market expectations. Apollo reported adjusted net income per share of $1.82, which was below the Bloomberg consensus estimates of $1.85.
The shortfall in earnings was attributed to lower than anticipated principle investment income, with Apollo generating $14 million compared to the street’s expectation of $56 million. Additionally, spread-related earnings were softer than predicted, coming in at $804 million against a consensus of $823 million. According to InvestingPro data, the company maintains strong financial health with a current ratio of 6.61, indicating liquid assets well exceed short-term obligations. Discover 12 more exclusive InvestingPro Tips and comprehensive financial metrics in our detailed Pro Research Report, available for over 1,400 US stocks. Despite these results, alternative investment income performance improved to 10%, surpassing both the pre-release estimate and the previous quarter’s figures.
Apollo’s management highlighted their conservative investment decisions during the quarter, such as holding a larger portion of assets in lower-yielding cash and cash equivalents due to tight spreads. This cautious approach led to a quarter-over-quarter decrease in net investment spread from 1.79% to 1.65%. The firm’s long-term strategy focuses on accruing value and adhering to a philosophy of investing at the right price, which is consistently communicated to the market.
Amidst a volatile macroeconomic environment, Apollo’s management emphasized the company’s position as one of the world’s largest alternative credit managers, capable of generating alpha through bespoke origination and structuring rather than pursuing aggressive growth trends. This prudent strategy has allowed Apollo to deploy approximately $25 billion in April alone, positioning itself as one of the largest global asset buyers in recent weeks.
However, Apollo has revised its 2025 SRE growth forecast from a previous 10% to a mid-single-digit level, which is expected to impact earnings projections. Despite this, fundamental business drivers such as fundraising, deployment, and originations remain robust, with Apollo reporting a record quarter of organic inflows at $43 billion and deployment increasing from $63 billion to $84 billion.
The firm’s fee-related earnings (FRE) for the first quarter of 2025 were particularly strong, with actuals of $559 million exceeding the consensus of $548 million, marking a record quarterly result. JPMorgan analysts see potential for Apollo to outperform its peers in management fee growth, particularly if it can continue to grow fees without relying heavily on active mergers and acquisitions and capital markets. With this in mind, JPMorgan maintains its Overweight rating on Apollo Global Management but has moderated its price target for December 2025 to $151, reflecting a slight reduction in estimates and a decrease in the multiple applied to FRE due to macroeconomic factors. The company’s strong fundamentals are reflected in its impressive gross profit margin of 44.24% and return on equity of 22%. InvestingPro subscribers can access detailed valuation models, comprehensive financial health scores, and expert analysis to make more informed investment decisions.
In other recent news, Apollo Global Management reported its Q1 2025 earnings, revealing an adjusted net income of $1.1 billion or $1.82 per share, which fell short of analysts’ expectations of $1.93 per share. The revenue was slightly below forecast at $978 million compared to an expected $981.9 million. Despite missing earnings expectations, Apollo announced a 10% increase in its cash dividend to $0.51 per share. The company also reported a 17% year-over-year increase in assets under management, reaching $785 billion, driven by record inflows of $43 billion during the first quarter. Apollo’s fee-related earnings reached a record $559 million, marking a 21% increase year-over-year. In addition, Apollo announced the acquisition of Bridge Investment Group in an all-stock transaction valued at approximately $1.5 billion, expected to close in Q3 2025. The company remains optimistic about achieving mid-single-digit growth in spread-related earnings for 2025, with future EPS and revenue forecasts suggesting continued growth through FY 2026.
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